London house building set to plummet by half as sales dwindle
04-06-2017
Cranes on a building spree in London - but it won't last Credit: AFP
Isabelle Fraser
The number of new homes built in London will plummet by more than half in the next five years after reaching a record high in 2017, according to research by high-end estate agent Savills.
Lower sales rates have pushed down the number of homes which developers are starting to build to half the amount completed this year.
It forecast that the number of new homes is expected to reach a record of 46,500 homes this year, above the 42,000 target set in the London plan.
This is still short of Savills' projection of housing demand in the capital, which it puts at 64,000 homes per year.
.jpg)
But the number of starts will reach just 21,500 this year, meaning that by 2021, the number of homes built will be just 18,000.
Use regions/landmarks to skip ahead to chart and navigate between data series.
The number of new homes in London will fall. Projected figures for construction starts, completions and sales of new homes in the capital suggest current trends will not continue
The number of new homes in London will fall
Projected figures for construction starts, completions and sales of new homes inthe capital suggest current trends will not continue
Savills
.jpg)
This is due to rapidly falling sales rates, as fewer homes are being sold off-plan which previously supported higher levels of homes being started. More than 25,000 of the 60,000 homes being built in the capital last year have not been sold.
The slowing sales rate and bumper amount of completed properties means that more homes will complete unsold this year than at any time over the past decade, according to data from Molior. The number of homes finished and unsold is forecast to hit 2,800 in 2017 – up from 1,000 last year.
However, this fall in homes built means that the high levels of supply in the market can be more easily absorbed. Edward Green, an analyst at Savills, said that London is "chronically undersupplied in the homes it desperately needs.
"An additional model for housing delivery is needed, that adds to the output of major house builders and the market sales model.”
Use regions/landmarks to skip ahead to chart and navigate between data series.
How supply outstrips demand - but only at the top of the market. There is a huge shortfall of lower-priced homes being built despite demand being much higher
Number of homes built
How supply outstrips demand - but only at the top ofthe market
There is a huge shortfall of lower-priced homes being built despite demandbeing much higher
Occupier Demand
Savills also found that there was a vast oversupply of more expensive homes which are far less in demand, than more affordable ones. It calculated that 58pc of housing demand is for homes costing less than £450 per sq ft, but this accounts for just 15pc of the five-year build forecast.
By contrast, properties worth more than £1,000 per sq ft make up 21.7pc of the homes built, but just 6.4pc of the demand.